With an official announcement on IRA contribution limits for 2024 expected any day now, it’s a good time to think through your retirement strategy. Here are some things to consider.
The limits for 401(k) and IRA contributions are expected to only increase by about $500 in 2024. For a 401(k), your limit will likely go from $22,500 to $23,000. For an IRA (traditional and Roth), your limit will bump up from $6,500 to $7,000.
If you plan on increasing your contributions to match the increase, now is a good time to review your budget. Make sure you shuffle things around so that you can accommodate the upcoming changes.
It’s almost always a good call to increase your contributions to your retirement accounts. However, just be prepared for the tax implications that can come with that move. Your 401(k) and traditional IRA withdrawals will be taxed, while your Roth IRA withdrawals will not. Be ready for what that looks like when you decide to retire.
If you’re 50 or older, consider taking advantage of catch-up contributions. These are additional funds that can be contributed beyond the set limit. If you qualify, it’s a good idea to match the catch-up limit. The catch-up contributions for 2024 are expected to stay the same as 2023: $7,500 for 401(k)s and $1,000 for IRAs.
Do One Thing: Revise your budget so that you can match the 401(k) and IRA contribution increase.